NZD/USD: Trading the New Zealand Employment Change


The New Zealand Employment Change is an important leading indicator which often has a significant impact on the markets. Traders and analysts carefully examine the indicator, looking for any trends which could affect NZD/USD.  A reading which is better than the market forecast is bullish for the New Zealand dollar.

Here are the details and 5 possible outcomes for NZD/USD.

Published on Thursday at 22:45 GMT.

Indicator Background

Job creation is one of the most important leading indicators of overall economic activity. The release of the employment change indicator, together with the unemployment rate, is highly anticipated by the markets.

The employment change indicator is released every quarter, which tends to make it a market-mover. The previous reading came in at a disappointing 0.1% increase, well below the market forecast of 0.4%.  The markets are  expecting a significant improvement, with a May forecast of 0.5%. Will the indicator be able to bounce back this month with a strong reading?

Sentiment and Levels

Interest rates in New Zealand are stable for now, and there is no  anticipation of any change in monetary policy by the central bank. The absence of QE3 in the US balances the picture, so the overall sentiment is neutral on NZD/USD towards this release.

Technical levels from top to bottom: 0.8290, 0.8264, 0.8190, 0.80, 0.79 and 0.7840.

5 Scenarios

  1. Within expectations: 0.2% to 0.8%: In this scenario, NZD/USD could show some slight fluctuation, but it is likely to remain within range, without breaking any levels.
  2. Above expectations: 0.9% to 1.2%: A reading above expectations would be an indication of growth in the economy, and could push the pair above one resistance level.
  3. Well above expectations: Above 1.2%: A sharp rise in employment numbers could propel NZD/USD upwards, and two or more resistance lines can be broken.
  4. Below expectations: -0.2% to 0.1%: A lower than expected reading could pull the pair downwards, with one support level at risk.
  5. Well below expectations: Below -0.2%: A very poor reading will hurt confidence in the kiwi, and NZD/USD could break two or more support levels.

For more on the kiwi, see the NZD/USD forecast.

Get the 5 most predictable currency pairs

About Author

Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer.

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